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June 29 — The U.S. Supreme Court once again cautioned the Environmental Protection Agency against an overly broad reading of its Clean Air Act authorities, but the implications for the agency's Clean Power Plan are unclear, attorneys said.

Congressional Republicans seized on the Supreme Court's decision remanding the EPA's toxic pollutant standards for power plants to a federal appellate court as further evidence that the agency has strayed from its statutory authority, arguing the same reasoning would apply to the Clean Power Plan. However, attorneys said the court's reasoning may not be applicable to the proposed carbon dioxide standards for existing power plants.

“All of us are trying hard to crystal ball this,” Jody Freeman, director of the Environmental Law Program at Harvard University told Bloomberg BNA June 29. “The Clean Power Plan is really a unique case and it’s really going to stand or fall on the specifics on [Clean Air Act Section] 111 and the strength of EPA’s arguments of whether it’s reasonable.”

The EPA's proposed Clean Power Plan (RIN 2060-AR33) would set a unique carbon dioxide emissions rate for the power sector in each state. State regulators would develop their own plans on how best to achieve those emissions goals. The rule is currently at the White House Office of Management and Budget for review.

The Supreme Court reversed a 2014 federal appeals court decision that upheld the EPA's mercury and air toxics standards (MATS), a rule that the agency estimated would cost the power industry $9.6 billion annually, finding the agency must consider compliance costs when determining whether regulating a pollutant under Section 112 of the Clean Air Act is appropriate and necessary (Michigan v. EPA, U.S., No. 14-46, 6/29/15).

Scalia Cautions Against Broad Readings

Justice Antonin Scalia, who wrote the majority opinion on the mercury and air toxics standards, said that the EPA “strayed well beyond the bounds of reasonable interpretation” when it chose not to consider compliance costs when it determined that it was appropriate and necessary to regulate toxic emissions from power plants.

Scalia had previously cautioned the EPA against overly broad readings of Clean Air Act provisions in a separate decision limiting the scope of the EPA's greenhouse gas permitting program. “When an agency claims to discover in a long-extant statute an unheralded power to regulate ‘a significant portion of the American economy,' Brown & Williamson, 529 U. S., at 159, we typically greet its announcement with a measure of skepticism,” he wrote in that decision (Util. Air Regulatory Grp. v. EPA, 2014 BL 172973, 78 ERC 1585, 134 S. Ct. 2427 (U.S. 2014) ).

Opponents of the Clean Power Plan have repeatedly cited that language in their arguments against the EPA's regulation.

However, Ann E. Carlson, the Shirley Shapiro Professor of Environmental Law at the University of California, Los Angeles, told Bloomberg BNA June 29 that Scalia's latest opinion does little more than reiterate that long-standing position.

“I don’t think it tells us anything we didn’t already know about Justice Scalia,” she said.

Decision Shows Split on Deference

James Rubin, counsel at Dentons U.S. LLP, told Bloomberg BNA June 29 that the latest Supreme Court decision suggests the justices have diverging opinions on how much deference agencies are due when interpreting statutes.

“This shows you that there’s a pretty divided court on what agency discretion means,” he said.

The EPA has argued it is due deference to interpret ambiguous language in Section 111(d) of the Clean Air Act as it has defended its proposed Clean Power Plan. Conflicting amendments to Section 111(d) were signed into law when the Clean Air Act was amended in 1990. The language adopted by the House would bar the EPA from regulating under Section 111(d) industrial sources that are already subject to standards under Section 112, as are power plants. The Senate's language would simply prevent the agency from regulating those pollutants under Section 111(d) that are already subject to hazardous air pollutant standards under Section 112.

The agency argued in lawsuits brought by coal companies and several states challenging the rule that the conflicting amendments create an ambiguity that is open to interpretation. The U.S. Court of Appeals for the District of Columbia Circuit dismissed those challenges on procedural grounds without addressing the merits of the arguments (In re: Murray Energy Corp., 2015 BL 180996, D.C. Cir., No. 14-1146, 6/9/15; West Virginia v. EPA, 2015 BL 180996, D.C. Cir., No. 14-1146, 6/9/15).

Republicans Seize on Decision

Republican lawmakers seized upon the court's decision as evidence that the EPA has overstepped its statutory authority and that the Clean Power Plan should be reined in as well.

Senate Majority Leader Mitch McConnell (R-Ky.) said the court’s decision showed that states should avoid the millions in anticipated costs to develop compliance plans, because the “likely illegal” EPA regulation itself could be ultimately overturned.

“Clearly, there is no reason to subject their states to such unnecessary pain before the courts have even had a chance to weigh in, especially if the Supreme Court simply ends up tossing the regulation out,” McConnell said.

Senior House lawmakers separately said the Supreme Court’s ruling showed the approach advanced by the Ratepayer Protection Act (H.R. 2042), which passed the chamber 247-180 on June 24, was appropriate. That bill allowed states to delay compliance with the Clean Power Plan until all legal challenges have been exhausted, among other provisions.

“The ruling further underscores the need to extend the compliance requirements for the pending [Clean Air Act Section] 111(d) rule until the numerous legal questions surrounding it are fully resolved,” said Reps. Fred Upton (R-Mich.) and Ed Whitfield (R-Ky.), who chairs the Energy and Commerce Subcommittee on Energy and Power.

Senate Efforts Pushed

Senate Republicans also vowed to advance legislation enabling states to opt out of the regulation until all litigation has finished.

“Going forward, states should not be forced to bear the brunt of other costly EPA regulations before legal challenges are complete,” Sen. Shelley Moore Capito (R-W.Va.) said. “I will continue to work with my colleagues to advance policies that protect reliable and affordable energy, put jobs and our economy first and curb federal overreach.”

Capito has introduced legislation (S. 1324) that would go much further than the House-passed bill by immediately killing off pending carbon pollution rules and setting even stricter requirements for the EPA to meet if it elects to try again on regulating carbon dioxide emissions from power plants.

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